Hospitality Industry Claims

Hospitality Industry Claims

Rebuilding after a natural disaster can be extremely challenging for any business, but for property owners in the hospitality industry, the challenges are more staggering. Many hotel and motel owners have insurance policies to protect them and their businesses after natural disasters, but when insurance companies use bad faith tactics, the consequences can be fatal for a hospitality industry business.

Hotel And Motel Damage

Like any other property that suffers damage, insurance companies will use a variety of bad faith tactics to minimize or completely deny claims for hotel and/or motel property damage. Oftentimes an insurance company will wrongfully claim that the damage was due to normal wear and tear or inadequate maintenance of the property. While these tactics are incredibly harmful to any business, they are particularly devastating to companies operating within the hospitality industry.

Business Interruption Claims For The Hospitality Industry

Business interruption insurance is a type of insurance designed to compensate business owners for a loss in income after a natural disaster. For example, if a business suffers damage from a fire, the business will be closed while necessary repairs are made. Business interruption insurance covers the loss of income and the costs incurred by the business while it is closed for repairs.

For hotels, business interruption claims often involve a decline in occupancy. Hotels and motels are in high demand after any natural disaster or major storm. Not only are residents displaced, but restoration crews, FEMA workers, insurance adjusters, and contractors flock to the affected area. These individuals need places to stay, so it is incredibly important that damaged hotels and motels can get up and running as fast as possible to benefit from the increased demand.

When insurance companies delay or fail to pay valid property damage claims for hotels and motels, these businesses lose the opportunity to serve the numerous individuals who have been displaced or have come to the area to assist in evaluating and rebuilding. This scenario occurred for many hotel and motel owners after Hurricane Harvey and Hurricane Maria last year. Those hurricanes devastated many buildings in their paths. While some hotels and motels were able to make repairs quickly, others sat boarded up or remained only partially operational, losing significant revenue.

Franchise Owners And Loss of Flag

For hotels and motels that are part of a franchise, delayed or underpaid insurance claims can have additional complications. Hotel franchisors have strict requirements for property condition, so when an insurance company delays or denies a payment, it can put the franchisee at risk of not being able to perform covenants in the franchise agreement.  At the end of the day, if the insurer doesn’t pay and the hotel owner cannot afford to complete the repairs themselves, the owner can lose the right to conduct business under the franchise agreement.  This then results in enormous added costs as the hotel owner seeks a different franchise – or flag – to operate under.

Get Help With Your Hospitality Insurance Claim

If your hotel or motel suffered commercial property damage or an interruption in regular business, don’t wait to contact an experienced lawyer to help with your hospitality insurance claim. Raizner Slania LLP can help you get full compensation under your policy. Call us today for a free consultation to discuss your case.

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